Cluster munitions pose a serious threat to civilian populations during and after a conflict. Cluster munitions are designed to blanket a large area containing one or more targets. They can be fired by artillery and rocket systems or dropped by an aircraft; they spread dozens, or even hundreds, of submunitions or bomblets over an area the size of a football field. Distribution of submunitions over such a broad area results in a large chance of civilian casualties during and after the attack. Many bomblets or submunitions fail to explode on impact. They remain on the ground like landmines that kill and injure civilians long after the conflict has ended. Although 98% of cluster munitions victims are civilians, cluster munitions producers don’t have any problems attracting capital from financial markets.
brief history
In February 2007 and after years of campaigning by Netwerk Vlaanderen,
the Belgian Parliament voted a law forbidding any investment in
cluster munition producers by Belgian financial institutions.
(“Financing a Belgian or foreign company active in production, usage,
repair, offer, sale, delivery, import, export or stocking of
submunition in the sense of this law, is also forbidden.”) The law also
instructs the Belgian government to produce a list of cluster munition
producers. Belgium is the first country banning investments in cluster
munitions.
In July 2005 a European Parliament Resolution
“Calls on the EU and its Member States to prohibit through appropriate
legislation financial institutions under their jurisdiction or control
from investing directly or indirectly in companies involved in
production, stockpiling or transfers of anti-personnel mines and other
related controversial weapon systems such as cluster sub-munitions.”
This resolution forms the perfect starting point for national legislation against investments in weapons producers and traders.
what must happen
Financial institutions should develop policies that exclude all financial links with companies involved in producing cluster munitions. Because any investment facilitates production, no exceptions should be made for third-party financial services, for funds that follow an index or for civilian project financing for a company also involved in cluster munitions. Policies should not be narrowed to refusing project financing for cluster munitions.
Financial institutions should apply their disinvestment policy to all activities: commercial banking, investment banking and asset management.
Using cluster munitions is a serious breach of International Humanitarian Law as it is impossible to distinguish between civilian and military targets, and causes disproportionate long-term civilian harm. Therefore cluster munitions stand out as the weapon category most in need of stronger national and international regulation. Cluster munitions pose a serious threat to civilian populations during and after a conflict.
Cluster munitions are designed to cover a large area where one or more targets are located. Spreading the munitions over this area results in a large chance of civilian casualties during the attack.
But these weapons also cause civilian casualties after the end of the armed conflict. The sub-munitions contained in cluster bombs or rockets have a certain rate of failure (dud rate). Following a cluster attack there will be many unexploded submunitions left behind over a large area. A mine field is created, with a great risk for civilians, for years after the conflict. At this moment cluster munitions have been used in 23 countries or areas. Recent use has been documented in amongst others former Yugoslavia, Afghanistan, Iraq and Lebanon. In the first world-wide research on cluster munitions victims, Handicap International revealed that nearly all recorded cluster munitions casualties are civilians, putting the figure at 98 percent. Twenty seven percent of these are children. Investing as complicity Investing in a company is clearly an active and supportive effort to raise the capital that is needed to fulfil the plans this company has made. Any financial service delivered to a company by a FI is in fact an approval and a belief in the plans this company is making. Moreover it is a crucial, important and necessary support to the company and its projects and plans.
Investing in a cluster munitions producer therefore is a choice to support the production of these civilian-killers, and is clearly choosing sides. On the other hand refusing to invest in cluster munition producers is also a clear choice. FIs that develop a policy to no longer invest in these companies are not willing to take responsibility for these kind of weapons and their use. They do not want to bear any complicity in the killing of innocent civilians.
Investors in cluster munition production can be considered as being complicit in the unnecessary killing and maiming of innocent civilians by cluster munitions during and after a conflict.
The third of December 2008 marked an important day for international humanitarian law. On that day, 94 countries gathered in Oslo to sign the Convention on Cluster Munitions (CCM), a Convention that categorically prohibits the use, production, transfer and stockpiling of cluster munitions.
On August 1, 2010 the Convention on Cluster Munitions (CCM) has entered into force. The Convention is now binding international law for more than 100 countries worldwide. Although the Convention on Cluster Munitions does not explicitly prohibit investments in cluster munitions, the prohibition on assistance that is included in article 1c of the Convention3, according to the report authors, should prevent states from investing in cluster munitions producers. Financing and investing are active choices, based on a clear assessment of a company and its plans. Investing in a cluster munitions producer therefore is a choice to support the production of weapons that cause unacceptable harm.
Credit to cluster munitions producers has been common over the years, and looks set to continue unabated if due attention is not given. Fortunately, parallel to the Oslo process, more and more financial institutions have recognised their responsibility to withdraw support for companies manufacturing cluster munitions. These financial institutions have banned cluster munitions producers from their investment portfolio. Many financial institutions have stated in public that they will disinvest from cluster munitions producers; some of them have already done so.
Although some financial institutions have made an effort to disinvest from cluster munitions, many find it difficult to implement their policy or have no policy (yet) on investment in companies that produce cluster munitions.
corporate loan: (Thales- January 2005, Rheinmetal- 2005) ABN Amro invested in Thales and Rheinmetal in 2005, both companies invested in producing cluster munitions. Engagement of ABN Amro is ended.
Agricultural Bank of China
- profile Agricultural Bank of China (ABC) was founded in 1951 as a wholly state-owned bank providing commercial banking services. Since then it has been mostly involved in financing China's rural economy. In 2010, Agricultural Bank of China was approved by China's State Council to become a joint-stock commercial bank and listed public shares on the Hong Kong and Shanghai Stock Exchanges.
Campaign Success Banco Bilbao Vizcaya Argentaria (BBVA) sold its position on the syndicate loan with Lockheed Martin on 24th February 2010 due to it’s defense policy. From that date BBVA does not have any kind of commercial relation with that company anymore".
Issuing of bonds: for Thales (Through Crédit Agricole CIB) (December 2006)
General corporate finance: Through Crédit Agricole CIB: Lockheed Martin - June 2007, Raytheon - March 2005, Thales - January 2005, Rheinmetall - April 2005
Campaign Success After pressure from the public, HSBC released a public summary of their revised defense equipment policy that states: “ HSBC does not provide financial services to customers – including holding companies – which manufacture or sell anti-personnel mines or cluster bombs. We do not provide financial services for transactions involving such weapons"
Campaign Success In January 2010 the Dutch banking group Robeco (daughter company of the Dutch Rabobank Group) introduced an exclusion policy that produce products that conflict with existing international treaties, especially treaties that deal with controversial weapons such as cluster munitions.
Overview of Rabobank's financial involvement in cluster munitions (2011) source: 112505 Rabobank.pdf
Campaign Success On 30 July 2010, Japan’s three largest banks said they would refrain from financing the manufacture of clusters bombs. Sumitomo Mitsui Financial Group (SMFG), Mitsubishi UFJ Financial Group (MUFG) and Mizuho Bank said they had stated in their regulations they would deny loans and investments for the productions of the munitions.
Campaign Success The Swiss bank UBS announced on 10 May 2010 that it would exclude producers of cluster munitions from its funds managed in Switzerland and Luxembourg.
Overview of UBS’ financial involvement in cluster munitions (updated 2011) source: 112505 Ubs.pdf
For a direct and more elaborate opverview of the investors in clustermunition see the report: Worldwide investments in cluster munitions producers; A shared responsibility, by Netwerk Vlaanderen & IKV PAX Christi - Updated April 2010:
Apr 01, 2010 | Netwerk Vlaanderen, IKV PAX Christi
A short version of the 'Hall of Fame and runners-up'-document. Both taken from the report: "Worldwide Investments in Cluster Munitions; A Shared Responsibility" Updated April 2010.
Netwerk Vlaanderen briefing paper on Financial Institutions and Cluster Munitions. The report identifies 68 financial institutions from around the world involved in funding the production of cluster munitions.
Shameful investments: banks still funding cluster bombs
Oct 05, 2010 - Cluster bombs are banned under the 2008 Convention on Cluster Munitions, but 138 banks and other financial institutions are still investing over $20 billion USD in the producers of these indiscriminate weapons. Activists paid a visit to 2 of the top banks investing in cluster bombs in the UK, Barclays and HSBC, to call on them to disinvest.
www.stopexplosiveinvestments.org
